The U.S. Navy's 5th fleet Wednesday warned Iran that any disruption of traffic flowing through the vital Strait of Hormuz oil route "will not be tolerated."
The warning came after Iran's navy chief Habibollah Sayyari told Iran's English language Press TV that "closing the Strait of Hormuz for Iran's armed forces is really easy ... or as Iranians say it will be easier than drinking a glass of water."
http://www.msnbc.msn.com/id/45805706/ns/world_news-mideast_n_africa/
They don't have the horses. They're trying to scare the oil markets and, thereby, scare the rest of the world into backing off on sanctions. All this proves is the sanctions used so far are working and they fear the next round. We need to squeeze them hard. If push comes to shove we'll have lots of help, as the Europeans are more dependent on Iranian oil than we are. Most of ours comes from Canada, as well as Mexico and Gen. Chavez.
-- Modified on 12/28/2011 5:29:31 PM
Not only do they not have the horses their partners the chinese rely on much of that oil as well
It will be interesting nonetheless to watch and see how they play their hand
and is not completey dependent on oil being transported through the Straits of Hormuz.
Should be an interesting day for oil tomorrow, in spite of this news being public before the market closed today. Oil still closed down today. I have no crystal ball about the markets reaction tomorrow, and besides I am done for the year, I have been on "vacation mode" for quite a while now. I'll worry about it next year. lol
As long as they don't have the enviro-freaks over there that sue to prevent oil pipelines from being built, like we have here.
First off the Saudis, unlike in 1985, don't have the excess capacity to offset the lost supply of crude oil if the Straits of Hormuz are shut off. Not without about $250 billion of infrastructure improvements at least.
Secondly, and equally as important. Even if Iran were to shut down the Straits, their oil would continue to flow, maybe not on the open market, but flow it will. The effect would be a significant black/gray market for crude, similar to what we experienced during the "oil for food" years of Iraq, but that crude is going to flow regardless of whether or not it flows throught the Straits of Hormuz.
So it appears as if both parties are bluffing with unloaded weapons, but that won't stop the markets fro running amok, and people will make and lose fortunes betting on the outcome.
Oil opened pretty much flat this morning, and is actually down a bit.
There is no real reason for oil prices to rise in the short/medium term from the current levels of around a hundred bucks a barrel. Actually IMO oil is slightly over bought, and is trading $10-20 bbl higher than it really should be. Of course as an oil producer, I am all for it. lol
that it came from Taiwan, not the PRC. China will certainly not start a nuclear war if the US imposes additional sanctions on Iran.
No one from the PRC Government is quoted here, only a lowly professor without the least authority to speak for the government or influence policy.
Truth be told, this clip is almost as intellectually dishonest as those posted by WW.
You are absolutely correct, China will not start a war with the West, nuclear or otherwise, because of sanctions on Iran.
Truth be told unilateral sanctions by the west will only serve to isolate Iran and make them more dependent on the Chinese, not a bad position for China to find themselves in. Make no mistake, China will do what is in the best interest of China. This plays right into their hands.
utube...i did'nt post it for the WW3 comments so much as simply the discussion about the close relations betweeen iran and PRC. you are no doubt correct about china doing what is best for china, as discussed in the video china has problems of its own... but it is also true that they will use iran to fuck with us, as that benefits them as well...
China definitely has problems of their own, but China is not known to be bashful about doing what they feel they need to to protect their own interests. As much as I would hate to live under their regime, there are a few lessons we could learn from them in that regard. Making the most of the resources in our own hemisphere would be a good start.
-- Modified on 12/28/2011 5:29:31 PM
The Senate passed the sanctions anyway, yet now the Administration is trying to water them down in a House-Senate conference on a defense bill. Treasury is asking the conferees to strike the Menendez-Kirk bill's most important provision, which applies the sanctions to any foreign central bank trading in oil via the Central Bank of Iran. The Administration wants the leeway to choose whether to block such banks from the U.S. financial system, or merely to "impose strict conditions" on them.
Treasury also wants to make it easier for President Obama to exercise the waiver option that the Senate gave him in a failed attempt to earn his support. In the Senate bill, the sanctions take effect after 60 days, so the President would have to issue three waivers before the 2012 election, answering to the public each time. Treasury would have the sanctions take effect after 180 days, so Mr. Obama would have to issue only one waiver before Election Day.
All of which suggests that the Administration's real motive for watering down the sanctions is fear that they could hurt Mr. Obama's re-election chances. The White House fears that disrupting Iran's oil exports would increase oil prices and thus the price of gasoline at the American pump.
http://online.wsj.com/article/SB10001424052970203501304577084393739902800.html?mod=googlenews_wsj
-- Modified on 12/28/2011 11:27:56 AM
what will he do?
a political decision..that's all he has done since Jan10 2009...his decision-making is based solely on politics...never what's best for the country....gotta make him a one termer!!
It may be hard to relate, but the average American worker takes home a whopping $600/week after taxes, bennies, etc. Out of that, he is paying rent, food, etc. He has precious little left over.
The price of oil affects the cost of his daily commute to work. (U.S. average 40 miles round trip.) It might not seem like a big deal, but as a percentage of disposable income, the impact of the price of gas going up just $1/gallon would be a serious issue. And that also includes heating oil. It costs nearly $900 to fill an oil tank. What if it cost an extra $300?
And then there's the fact those energy costs would be figured into the costs of just about everything, and his little disposable income would be whittled away to nothing.
It is my theory that a great deal of the current recession is caused by higher gas prices as they are because of their impact on discretionary spending.
So -- yeah, if Obama is seen to be doing something that raises gas prices, the electoral impact would be ... impressive.
it's a well known fact (even if ignored by many) that the price of oil is one of those imbedded factors of inflation. The price of oil is a lagging indicator, usually by a factor of about six months, of "real" inflation.
As you stated, the cost of oil impacts EVERYTHING, from the cost of transportation of not only commuters, but transportation of virtually all goods including meat, produce, grains, etc. If the price of gasoline increases by a dollar a gallon, Obama is toast, just like Carter before him.
As big a fan of Reagan as I am, I am well aware that rightly or wrongly, a big part of our recovery from the Carter years, besides tax reform, was the huge drop in oil prices in 1985. We went from $35 bbl when Reagan took office in 1980, to about $8 bbl in 1985 when the Saudis broke ranks with the rest of OPEC.
So yes, Obama has every motivation to keep gas prices in check, even if it is only a fleeting and transitory stablization of prices. Just enough to keep him in office is all he is concerned with for the time being, in my humble opinion of course. lol
Just a thought, I dimly recall Clinton released some of the strategic oil reserve in order to lower prices back in the 90's. I wonder if Obama might do the same in order to shore up his re-election chances. How much affect on the price of oil could this have? Is it possible to knock down the price by a dollar or just a few pennies?
It had little lasting effect on prices. The amount of oil in the SPR isn't great enough to have a long-term effect on prices. Also, it's not intended for that purpose and is only meant to stave off disaster for a while in the case of a massive interruption of world oil supplies.
There is only a few weeks supply in the SPR, not enough to have any real impact. It has had an emotional effect on markets in the past, but nothing lasting. If Obama were to use it, it would be the act of a desperate man, and would viewed as such by most. The American people can be quite stupid at times, but this would be such a transparent move, and such an ineffectual one that it would be terribly counterproductive to Obama. Personally I think he is too smart a politician to do something that stupid.
Suppose you could dump the entire reserve on the market one morning. The point wouldn't be to make it sustainable, but just to see how much you could drop the price. How much would the price drop?
With a little over 700 million barrels in the reserve and a maximum rate of 4.4 million BOPD of withdrawing the oil it would take about six monts to completly drain the SPR. To put this in perspective. The world consumes well over 80 million BOPD, and the US consumes about 1/4 of the worlds oil. We are talking a total reserve of about 9 days worth of total world consumption and/or about a month's worth of US consumption.
If the US were to dump the entire SPR and flood the market with the 4.4 million BOPD that the reserve is capable of, it would increase supply by about 4% for the six months or so beofre the SPR ran dry. I can only speculate what this added supply would do to oil prices, but I would exspect it would lower them by a factor of 10-20% at most, taking crude from the $100 range to the $80-90 range.
IOW The SPR is not something that can really be used to influence oil prices to any great degree, sorry.
so a SPR release now and would be seen as pandering for votes.
and 1bn 2nd Marines along with Naval gun made fish food out of them. See Operation Praying Mantis.
Iran and no one else can close the Staits of Hormuz. You need to think about this for a few min.
1. it about 10 miles wide at it's narrows. What would you put there to close it that couldn't be blown out of the water by the 5th fleet.
2. Why would the Irans use military might to close the Strait when all they have to do is stop selling oil.
3. We can move oil from Iraq and Saudi thru Gulf of Aden.
The whole idea is stupid. That's why the markets didn't react. If we had any guts we should have called their bluff and said. "Fuck You Close it."
possible answers:
1. landbased missiles? not the shit they're shipping to lebanon either
2. if THEY stop selling oil, only THEY and their customers get hurt. If they plow a couple Silkworms into 1 tanker, NOBODY get oil EXCEPT that which can move overland as noted by the oildude. I serously doubt however there really is that much redundancy to not severly effect flow.
3. sure it sounds dumb to us..but remember, this saber rattling is in response to a preemptive strike against the nuclear program they have spent decades building...a program THEY see as giving them huge amounts of leverage in the future..
so the question is, what are the willing to do to protect this program?
Stop and think what you're saying. "A silkworm into 1 tanker." 1 Silkworm into 1 tanker like the ones in the Straits (3,000,000 barrels) would cause mega disaster from Iraq to the tip of India including Iran. The 5th fleet has defensive and offensive capabilities against Silkworm.
I think a move like this would be the end of Iran's extreme government.
You do ask a valid question:
" so the question is, what are the willing to do to protect this program?"
I think the answer might be: As much as they can bluff and get away with. I just don't buy the blockade bluff.
good points,
i guess we'll have to wait and see. as gag and i were discussing in another thread,
a lot depends on the rationality of those with their fingers on the trigger...hopefully they don't put their money where their Jihad is
-- Modified on 12/29/2011 5:36:15 PM